Europe’s STOXX 600 Achieves All-Time Closing High on China Stimulus Boost, Reports Reuters

By Pranav Kashyap and Shashwat Chauhan

European shares surged on Thursday, particularly benefiting from stocks linked to China, including luxury brands and mining companies, following news of significant economic stimulus measures from China. Additionally, shares in the chip sector advanced after a positive revenue forecast from U.S. company Micron.

The pan-European index finished 1.3% higher at 525.61 points, marking an unprecedented closing high and sitting just 0.2% short of the intraday record.

Chinese authorities committed to increasing "necessary fiscal spending" to achieve this year’s growth target of about 5%, recognizing emerging challenges and raising market hopes for additional stimulus beyond the measures announced earlier in the week.

"This is a very positive market reaction that may diminish over time, as the challenges related to Chinese demand will take time to address," noted Tim Graf, managing director and head of macro strategy for EMEA at State Street Global Markets. "It’s a relief rally in response to efforts being made, but the journey ahead is still quite lengthy."

Luxury firms with exposure to the Chinese market, such as LVMH and Hermes, saw their stocks rise approximately 9% each, contributing to a 6.5% increase in a sector index comprising ten of Europe’s largest luxury brands.

Mining stocks recorded a notable gain of 4.3%, buoyed by higher base metal prices. The technology sector in Europe also saw a 3% increase, driven by semiconductor companies after Micron Technology projected revenues exceeding expectations due to demand for artificial intelligence.

In contrast, major energy stocks fell by 3% as prices dropped by over 2%, influenced by reports that Saudi Arabia might abandon its price targets in anticipation of increasing output, while OPEC+ is expected to raise production in December.

The Swiss National Bank reduced interest rates by 25 basis points, aligning with similar moves by the European Central Bank (ECB) and the U.S. Federal Reserve, leaving the possibility open for further cuts as inflation continues to decline. The Swiss benchmark index rose by 1.4% following this announcement.

Sources indicated that policymakers at the ECB are gearing up to advocate for an interest rate cut in the upcoming month after several disappointing economic data points, although this may face opposition from conservative members. Deutsche Bank has now forecast a quicker cycle of rate cuts from the ECB, starting with consecutive quarter-point reductions from December.

Swatch Group’s shares spiked 12.1%, following reports suggesting the watchmaker might consider delisting.

In Germany, Commerzbank’s shares rose 6.9% after the bank reaffirmed its strategic plan extending to 2027, aiming for payout ratios exceeding 90% for the years 2025 to 2027.

Conversely, H&M experienced a decline of 4.6% after the global fashion retailer withdrew its margin target for 2024.